REG - Edita Food Ind SAE - Edita Annouces 3Q2022 Results
14/11/2022 13:30
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RNS Number : 3399G Edita Food Industries S.A.E. 14 November 2022
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Cairo, 15 November 2022
Edita Food Industries Reports 3Q/9M2022Earnings
Edita maintains growth momentum as it delivers record-breaking results with
revenue crossing the EGP 2.0 billion mark and profit increasing 2.5x
year-on-year to reach EGP 286.1 million in 3Q2022 with a net profit margin of
14.2%. Regionally, export sales grew 40.3% y-o-y and a second production line
was installed in Morocco to launch Twinkies.
Highlights of 3Q2022
Summary Income Statement (EGP mn)
EGP mn 3Q2022 3Q2021 Change 9M2022 9M2021 Change
Revenue 2,015.6 1,394.7 44.5% 5,147.7 3,711.8 38.7%
Gross Profit 681.5 412.9 65.1% 1,756.8 1,152.5 52.4%
% Margin 33.8% 29.6% 34.1% 31.0%
EBITDA 439.6 210.3 109.0% 1,014.1 552.8 83.5%
% Margin 21.8% 15.1% 19.7% 14.9%
Net Profit 286.1 112.9 153.4% 630.2 277.4 127.2%
% Margin 14.2% 8.1% 12.2% 7.5%
The discussion and analysis in this report are based on the IFRS statements.
For comparison of the results to Egyptian Accounting Standards, please refer
to the section "Egyptian Accounting Standards Reconciliation to IFRS."
Results in a Nutshell
Edita Food Industries S.A.E. (EFID.CA on the Egyptian Exchange & EFID.L on
the London Stock Exchange), a leader in the Egyptian packaged snack food
market, announced today its results for the third quarter ended 30 September
2022, recording revenue of EGP 2,015.6 million, a 44.5% y-o-y increase. During
the third quarter, profitability continued to improve substantially as
reflected on gross profit and net profit results. Edita saw a 65.1% y-o-y
gross profit expansion to EGP 681.5 million while net profit recorded EGP
286.1 million in 3Q2022, up an impressive 153.4% y-o-y with a net profit
margin of 14.2% compared to 8.1% in the same quarter last year.
On a nine-month basis, the company recorded revenue of EGP 5,147.7 million in
9M2022, up a strong 38.7% from the EGP 3,711.8 million reported in 9M2021.
Strong top-line growth filtered down to the company's bottom-line which
expanded an impressive 127.2% y-o-y in 9M2022 to EGP 630.2 million with an
associated margin of 12.2% for the period versus the 7.5% reported in 9M2021.
Edita was successful in reaching new results records as it continued to expand
its top-line despite an increasingly challenging operating environment.
Revenue during the quarter was driven by both higher prices and volume growth.
In 3Q2022, average price per pack reached EGP 2.16, up 20.8% y-o-y, and
average price per ton increased 42.5% y-o-y, driven by direct and indirect
price increases to mitigate the pressure on profitability margins. On the
volumes front, Edita recorded a 19.7% y-o-y increase in total packs sold to
932.8 million, with cakes being the main contributor to volume growth. In
9M2022, average price per pack increased 18.3% y-o-y to EGP 2.10 and total
packs sold reached 2,448.6 million, up 17.2% y-o-y compared to 9M2021.
Cost of sales booked EGP 1,100.0 million in 3Q2022, up 39.1% y-o-y, on the
back of a increases in direct material components. In 3Q2022, packaging
material costs increased by 33% y-o-y, fats and oil by 30% y-o-y, sugar by 42%
y-o-y, flour by 52% y-o-y and eggs by 44% y-o-y. On a year-to-date basis, cost
of sales was up 37.3% y-o-y to reach EGP 2,752.3 million. Similarly, in 9M2022
packaging material costs increased by 45% y-o-y, fats and oil by 40% y-o-y,
sugar by 36% y-o-y, flour by 34% y-o-y, eggs by 38% y-o-y and cocoa by 38%
y-o-y. Together these ingredients account for 88% of total direct materials.
Gross profit expanded on a year-on-year basis driven by price increases and
MOH efficiencies. In 3Q2022, gross profit reached EGP 681.5 million, up 65.1%
y-o-y, with a gross profit margin of 33.8% versus the 29.6% recorded last
year. Manufacturing overheads (MOH) declined to 9.9% as a percentage of sales
in 3Q2022 compared to 11.2% in 3Q2021 on the back of economies of scale and
further efficiencies. Consequently, gross profitability improved despite a
39.1% y-o-y increase in direct material costs. On a year-to-date basis, gross
profit recorded EGP 1,756.8 million, up 52.4% compared to 9M2021. Meanwhile,
gross profit margin reached 34.1% in 9M2022 compared to 31.0% last year.
Total SG&A for 3Q2022 stood at EGP 288.5 million, a 20.7% y-o-y increase;
however, SG&A as a percentage of sales significantly declined to 14.3%
compared to 17.1% in the third quarter of last year. This was due to a decline
in selling and distribution as well as advertising and marketing expenses as a
percentage of sales and higher operating leverage. In 9M2022, total SG&A
recorded EGP 861.7 million which accounted for 16.7% as a percentage of sales
versus 19.4% in 9M2021.
EBITDA for the quarter stood at EGP 439.6 million, up 109.0% y-o-y, with an
EBITDA margin of 21.8% compared to 15.1% in 3Q2021. Improved EBITDA was
supported by SG&A efficiency and a high operating leverage. On a
nine-month basis, EBITDA grew 83.5% y-o-y in 9M2022 to reach EGP 1,014.1
million, yielding an EBITDA margin of 19.7% for the period versus 14.9% in
9M2021.
Net profit for the quarter grew an impressive 153.4% y-o-y to EGP 286.1
million with a greatly improved net profit margin of 14.2% versus 8.1% for
3Q2021, driven by strong performance down the income statement. On a
year-to-date basis, net profit grew by 127.2% y-o-y to reach EGP 630.2 million
with an associated net profit margin of 12.2% compared to 7.5% in 9M2022.
In 3Q2022, gross export sales recorded EGP 129.0 million, up 27.1% q-o-q and
40.3% y-o-y, contributing 6.5% to total revenue during the quarter.
On the regional front, Edita Morocco recorded EGP 36.9 million in revenue in
its third full quarter of operations, bringing the total amount in 9M2022 to
EGP 89.0 million. In 9M2022, total packs sold in Morocco reached 47 million.
In October 2022, the facility began operating a new cake production line,
which produces Twinkies products for the first time in Morocco. The facility
marks a key milestone in Edita's regional expansion strategy and enables the
company to strengthen its presence in the attractive Moroccan market.
Operational Developments
In the first nine months of 2022, Edita introduced several differentiated
products that cater to consumer evolving tastes. In January, the company
launched its latest wafer product, Freska Choco Sticks, a rolled wafer with
chocolate coating and chocolate hazelnut filling, retailing at EGP 3.0 per
pack under the Freska brand. This was later followed in February by the launch
of Oniro LAVA at the biscuit segment, a filled biscuit with cocoa hazelnut
cream offered in vanilla and chocolate flavours and retailing at a competitive
EGP 3.0 per pack. In February, the baked filled sandwich was rebranded and
reintroduced as Molto Fino. The product is offered in eight flavours, which
expands the company's portfolio in the savoury subsegment of Egypt's bakery
market. Both product launches were supported by dedicated marketing and
advertisement campaigns featuring top-class celebrities and were very
successful in driving demand for the new products. In October, the company
launched a new cake product, HOHOs Mix, a chocolate coated, chocolate cake
filled with vanilla and cocoa cream, retailing at EGP 5.0 per pack.
In order to mitigate the impacts of global inflationary pressures and
persistently rising commodity prices as well as to protect profitability,
Edita implemented two rounds of direct price increases and product
reconfigurations. The first took place in 4Q2021 and saw bakery products
previously priced at EGP 2.0 per pack repriced at EGP 3.0 per pack and those
priced at EGP 3.0 per pack move up to EGP 4.0 per pack. The second round of
direct price increases was put into effect in 1Q2022 and applied to the bakery
and wafer segments. Bakery products previously priced at EGP 4.0 per pack were
repriced at EGP 5.0 per pack, while those priced at EGP 5.0 per pack were
repriced at EGP 7.0 per pack. Meanwhile, wafer bar products under the Freska
label priced at EGP 3.0 per pack have been upsized and a smaller variation
retailing at EGP 2.0 per pack was introduced in October 2022. In 2Q2022, at
the rusks segment consumers migrated to the EGP 3.0 price point and products
priced at EGP 2.0 per pack were delisted. Additionally, a series of indirect
price increases were introduced at the cakes segment through product
downsizing.
The current state of the global business environment poses many operational
challenges, which are in part mitigated by Edita's long-standing relationships
with global and local suppliers and have allowed the company to maintain a
highly favourable supply position in the market. The teams are closely
monitoring prices and stock levels in order to optimize supply chain
management.
Overview of Segment Performance
On a segment basis, Edita's consolidated top-line grew 44.5% y-o-y with
revenue at the six segments benefitting from higher prices and volume. The
main contributor to consolidated revenue growth was the cakes segment, which
recorded a revenue of EGP 1,014.2 million in 3Q2022, up 66.1% versus 3Q2021.
Growth in the cakes segment was supported by an increase of 43.9% y-o-y in
packs sold coupled with a 15.4% y-o-y increase in the average price per pack.
At the bakery segment, revenue grew by 35.5% y-o-y in 3Q2022 to EGP 710.0
million on the back of a 38.7% y-o-y increase in the average price per pack,
which outweighed the 2.3% y-o-y decline in volumes sold. Bakery volumes are
making a strong recovery back to normal levels increasing 43.0% q-o-q
following sharp declines due to the migration to higher price points.
Meanwhile, the wafers segment saw a marginal revenue decrease of 0.9% y-o-y as
the 23.9% y-o-y drop in volumes outweighed the 30.2% y-o-y increase in average
price per pack. Revenue from the rusks segment recorded EGP 97.7 million
during the quarter, up 28.4% y-o-y, as average price per pack increased 50.8%
y-o-y offsetting a 14.8% y-o-y drop in packs sold. Revenue in the candy
segment expanded 13.1% y-o-y to EGP 44.4 million in 3Q2022, driven by a 66.8%
y-o-y increase in the average price per pack. Finally, the biscuits segment
saw its top-line expand by 296.1% y-o-y recording EGP 8.6 million during the
quarter as volumes grew 223.9% y-o-y and average price per pack increased
22.3% y-o-y.
Consolidated gross profit rose 65.1% y-o-y in 3Q2022 to reach EGP 681.5
million with year-on-year gross profit growth recorded across all segments
despite the persistence of inflationary pressures and supply chain
disruptions. Edita managed raw material cost increases through refined pricing
and portfolio optimization while MOH increases were mitigated through
efficiencies due to operating leverage.
The cakes segment recorded a year-on-year gross profit growth of 67.3% in
3Q2022 with a gross profit of EGP 336.8 million and a GPM of 33.2% compared to
33.0% in 3Q2021. Edita did not impose any direct price increases in the
segment and is sustaining profitability through product downsizing and product
mix improvements. Meanwhile, the bakery segment saw its gross profit expand
76.9% y-o-y to reach EGP 264.5 million in 3Q2022, with a strong GPM recovery
of 37.2% against the 28.5% recorded one year previously. These results were
supported by direct price increases, which reflected positively on margins.
Similarly, the wafers segment recorded a year-on-year gross profit growth of
19.2% in 3Q2022 with a gross profit of EGP 42.3 million and a GPM of 30.0%
compared to 25.0% last year, due to the introduction of direct price
increases. At the rusks segment gross profit expanded by 38.7% y-o-y to reach
EGP 28.0 million for the quarter, with a GPM of 28.7% versus 26.6% in 3Q2021.
Meanwhile, the candy segment posted a year-on-year gross profit growth of
45.7% in 3Q2022, with a GPM of 20.9% compared to 16.2% in 3Q2021. Finally,
Edita's biscuits segment recorded a gross profit of EGP 0.8 million with a GPM
of 8.7% during the quarter compared to the loss recorded last year.
Revenue and Gross Profitability by Segment
EGP mn 3Q2022 3Q2021 Change 9M2022 9M2021 Change
Cakes
Revenue 1,014.2 610.7 66.1% 2,507.7 1,589.8 57.7%
Gross Profit 336.8 201.3 67.3% 847.3 544.2 55.7%
Gross Profit Margin 33.2% 33.0% 0.2pts 33.8% 34.2% -0.4pts
Bakery
Revenue 710.0 524.1 35.5% 1,677.6 1,369.8 22.5%
Gross Profit 264.5 149.5 76.9% 616.5 413.5 49.1%
Gross Profit Margin 37.2% 28.5% 8.7pts 36.7% 30.2% 6.6pts
Wafers
Revenue 140.7 142.0 -0.9% 527.5 422.8 24.8%
Gross Profit 42.3 35.4 19.2% 178.0 118.3 50.4%
Gross Profit Margin 30.0% 25.0% 5.1pts 33.7% 28.0% 5.7pts
Rusks
Revenue 97.7 76.0 28.4% 275.9 201.3 37.1%
Gross Profit 28.0 20.2 38.7% 81.7 56.9 43.5%
Gross Profit Margin 28.7% 26.6% 2.1pts 29.6% 28.3% 1.3pts
Candy
Revenue 44.4 39.3 13.1% 126.8 113.4 11.8%
Gross Profit 9.3 6.4 45.7% 26.8 17.7 50.9%
Gross Profit Margin 20.9% 16.2% 4.7pts 21.1% 15.6% 5.5pts
Biscuits
Revenue 8.6 2.2 296.1% 32.2 13.8 132.9%
Gross Profit 0.8 (0.2) - 6.8 1.2 448.3%
Gross Profit Margin 8.7% -7.5% 16.2pts 21.2% 9.0% 12.2pts
Total Revenues* 2,015.6 1,394.7 44.5% 5,147.7 3,711.8 38.7%
Total Gross Profit* 681.5 412.9 65.1% 1,756.8 1,152.5 52.4%
Total GPM 33.8% 29.6% 4.2pts 34.1% 31.0% 3.1pts
*Includes contributions from Edita's imports segment
Segment Volumes and Prices
EGP mn 3Q2022 3Q2021 Change 9M2022 9M2021 Change
Cakes
Packs (mn) 610 424 43.9% 1,532 1,102 39.0%
Tons (000s) 17.1 15.3 11.8% 45.1 41.4 8.9%
Av. Price (EGP) 1.66 1.44 15.4% 1.64 1.44 13.5%
Bakery
Packs (mn) 212 217 -2.3% 510 582 -12.3%
Tons (000s) 12.3 12.7 -3.4% 30.1 33.9 -11.1%
Av. Price (EGP) 3.34 2.41 38.7% 3.29 2.35 39.7%
Wafers
Packs (mn) 62 81 -23.9% 258 242 6.7%
Tons (000s) 1.5 2.3 -34.4% 6.0 6.9 -11.9%
Av. Price (EGP) 2.27 1.75 30.2% 2.04 1.75 17.0%
Rusks
Packs (mn) 35 41 -14.8% 110 107 3.0%
Tons (000s) 1.5 1.6 -4.1% 4.6 4.3 6.2%
Av. Price (EGP) 2.83 1.87 50.8% 2.51 1.89 33.1%
Candy
Packs (mn) 10 15 -32.2% 25 49 -48.6%
Tons (000s) 0.7 0.9 -18.2% 2.2 2.5 -12.6%
Av. Price (EGP) 4.32 2.59 66.8% 4.99 2.29 117.6%
Biscuits
Packs (mn) 4 1 223.9% 13 7 92.3%
Tons (000s) 0.1 0.0 304.5% 0.5 0.2 191.4%
Av. Price (EGP) 2.45 2.00 22.3% 2.42 2.00 21.1%
Total Packs* (mn) 933 779 19.7% 2,449 2,089 17.2%
Total Tons* (000s) 33.3 32.8 1.4% 88.6 89.2 -0.7%
Av. Price/Pack (EGP) 2.16 1.79 20.8% 2.10 1.78 18.3%
*Includes contributions from Edita's imports segment
Balance Sheet
The company's total loans and borrowings as at 30 September 2022 stood at EGP
1,349.0 million, up from EGP 1,195.2 million as at year-end 2021. Total bank
overdrafts recorded EGP 373.1 million as at 30 September 2022 down from EGP
400.7 million at year-end 2021. Cash balance stood at EGP 1.3 billion as at 30
September 2022 versus EGP 1.0 billion at year-end 2021. Edita recorded EGP
71.1 million in net debt as at 30 September 2022 compared to EGP 189.3 million
in net debt at year-end 2021.
Edita's reported inventories of EGP 825.9 million as at 30 September 2022, up
from EGP 526.5 million as at 31 December 2021. Meanwhile, trade receivables
stood at EGP 62.9 million as at 30 September 2022, up from EGP 30.2 million as
at 31 December 2021.
Total CAPEX for the period ending 30 September 2022 was EGP 300.8 million
including IT, expansion, maintenance and motor vehicle expenses.
Egyptian Accounting Standards Reconciliation to IFRS
Edita's EAS and IFRS financial statements differ in the treatment of
employees' profit share, which is expensed under the IFRS, while the EAS
accounts for them as a distribution and are thus not included on the income
statement. Also, EAS and IFRS differ in the calculation of EBITDA. In 9M2022,
EGP 1.2 million in FX gain and EGP 7.8 million related to gains on the sale of
fixed assets were deducted from EBITDA. Moreover, a profit share deduction of
EGP 45.6 million was made, bringing total EAS to IFRS adjustments on EBITDA to
EGP 54.6 million. A reconciliation between Edita's financial statements in EAS
with the IFRS-based financial statements for 9M2022 is provided in the table
below.
in EGP mn* 9M2022 EAS Adjustment 9M2022 IFRS
Net Sales 5,147.7 5,147.7
COGS (excluding MOH) 2,752.3 2,752.3
MOH 517.9 (21.7) 539.6
Total 3,270.2 (21.7) 3,291.9
Gross Profit 1,778.5 21.7 1,756.8
Gross Profit Margin 34.5% 34.1%
Selling & Distribution Exp. 315.5 (16.8) 332.3
Advertising & Marketing Exp. 231.1 231.1
General & Admin. Exp. 291.1 (7.2) 298.3
Other Operational Exp. 62.9 1.8 61.1
Profit from Operations 877.8 43.8 834.0
Profit from Operations Margin 17.1% 16.2%
Lease Finance Interest 7.3 (0.7) 8.0
Profit Before Income Tax 876.9 43.7 833.2
Income Tax Expense 203.1 0.1 203.0
Net Profit After Tax 673.8 43.6 630.2
Net Profit After Tax Margin 13.1% 12.2%
EBITDA 1,068.7 54.6 1,014.1
EBITDA Margin 20.8% 19.7%
*Figures are based on management accounts for better disclosure on expenses
breakdown
-Ends-
About Edita Food Industries
Edita, founded in 1996 and headquartered in Egypt, is a leader in the growing
Egyptian packaged snack food market. The Company manufactures, markets and
distributes a range of branded baked snack products including packaged cakes,
bakery, rusks (baked wheat), wafers and biscuits as well as selected
confectionary/candy products. The Company's local brand portfolio includes
household names such as Todo, Molto, Bake Rolz, Bake Stix, Freska, Oniro and
MiMix. The Company also has the exclusive ownership of the international
Hostess brands Twinkies, Hoho's and Tiger Tail in Egypt, Libya, Jordan,
Palestine, Morocco, Algeria, Tunisia, Syria, Lebanon, Iraq, Bahrain, Oman, the
UAE, Kuwait, Qatar and Saudi Arabia; and is party to a technical assistance
and know-how agreement to manufacture 11 additional Hostess brands across its
territories. The Company holds strong number-one market positions in its core
cake and bakery segments as well as in rusks, a leading market position in
candy and a growing market position in the wafers segment. In 3Q2022, the
Company derived 93.5% of its revenue from Egypt and 6.5% from regional export
markets. Learn more at ir.edita.com.eg
Contacts
Ms. Menna Shams El Din
Head of Investor Relations & Corporate Affairs
T: +202 3851-6464 | menna.shamseldin@edita.com.eg
Ms. Alia Balbaa
Investor Relations Manager
T: +202 3851-6464 | alia.balbaa@edita.com.eg
Forward Looking Statements
This communication contains certain forward-looking statements. A
forward-looking statement is any statement that does not relate to historical
facts and events, and can be identified by the use of such words and phrases
as "according to estimates", "aims", "anticipates", "assumes", "believes",
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"may", "plans", "potential", "predicts", "projects", "should", "to the
knowledge of", "will", "would" or, in each case their negatives or other
similar expressions, which are intended to identify a statement as
forward-looking. This applies, in particular, to statements containing
information on future financial results, plans, or expectations regarding
business and management, future growth or profitability and general economic
and regulatory conditions and other matters affecting the Company.
Forward-looking statements reflect the current views of the Company's
management ("Management") on future events, which are based on the assumptions
of the Management and involve known and unknown risks, uncertainties and other
factors that may cause the Company's actual results, performance or
achievements to be materially different from any future results, performance
or achievements expressed or implied by these forward-looking statements. The
occurrence or non-occurrence of an assumption could cause the Company's actual
financial condition and results of operations to differ materially from, or
fail to meet expectations expressed or implied by, such forward-looking
statements.
The Company's business is subject to a number of risks and uncertainties that
could also cause a forward-looking statement, estimate or prediction to differ
materially from those expressed or implied by the forward-looking statements
contained in this prospectus. The information, opinions and forward-looking
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subject to change without notice. The Company does not undertake any
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